The dollar remains generally weak in today’s trading, although overall sentiment is stabilizing. Risk trading is taking a breather to some extent after earlier US stocks hit new intraday gains.
Meanwhile, the dollar sell-off continues at the beginning of the American session and continues after weaker-than-expected values of the core CPI. Sterling rallies today amid rising UK yields, with 10-year yields currently hitting 0.494. It could try to break the pre-pandemic low of about 0.50%. Foreign exchange markets in other countries are relatively heterogeneous, with notable resilience in the Swiss franc but not in the yen. Commodity currencies and the euro are stable, but there are currently no impulsive follow-up purchases.
The dollar continued its decline as markets remain largely bullish, awaiting stimulus news and welcoming vaccination prospects. Data on inflation in the US and a speech by the Chairman of the Federal Reserve System Jerome Powell are expected. The yield on 10-year US Treasuries stabilized at 1.15% after a preliminary increase. The current lull in the bond market has been replaced by a mood of risk-taking.
The British pound sterling continues to rise, with the price rising to a new high in three and a half years. The gain occurs as the GBPUSD approaches the level of 1.3866. The pound is once again winning the hearts and minds of investors as the UK’s success in spreading the coronavirus vaccine improves the chances of an economic recovery.
The pair has been one of the most profitable G10/USD currencies for the day as the fundamentals underlying the pound remains positive. Meanwhile, the US dollar is mixed compared to its G10 peers, and softer-than-expected consumer price inflation data for January is not helping. The pair is currently trading at around 0.2% gains or 30 pips per day.
The market remains optimistic about the prospects for a massive US budget spending plan. This comes amid progress in the rollout of vaccines for the highly contagious coronavirus disease and is fueling expectations for a strong global economic recovery while maintaining the prevailing risk environment.
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